16 October 2008 / by Rachael Stiles

In response to the Bank of England's decision last week to cut the base rate from 5 to 4.5 per cent, the Co-operative Bank has announced it is passing on the full 0.5 per cent reduction to its mortgage customers.

In a special meeting last Wednesday the MPC announced it was cutting rates by 0.5 per cent a full day before the announcement is usually made.

The MPC's quick and determined confirmation of a rate cut further emphasised the severity of the current financial situation.

Many experts suggested that although the cut was good news for home owners in theory, many lenders may not pass on the reduction to their mortgage customers.

But, the same day, Halifax matched the cut, taking its standard variable mortgage rate from 7 per cent to 6.5 per cent. Barclays also passed on the full 0.5 per cent cut through its mortgage arm, Woolwich Mortgages.

"Following last week's changes to the Bank of England Base Rate, The Co-operative Bank will be passing on the full benefit of the base rate reduction to its mortgage customers, by cutting its standard variable rate (SVR) by 0.50 per cent to 6.49 per cent, with effect from 1 November 2008," the Co-op said in a statement.

Nationwide is also cutting rates by 0.5 per cent on its tracker deals and by 0.30 per cent on its Base Mortgage Rate, making it the lowest rate on the high street.

Matthew Carter, divisional director for mortgages at Nationwide, said: "Borrowers on our BMR are already benefiting from a rate which has been consistently lower than the average SVR on the market and, following the changes we've announced, Nationwide's standard mortgage rate will become the lowest on the high street."